From barricades to boardrooms: The climate activists targeting corporate Australia

It was a busy Friday for Brynn O'Brien three weeks ago. The former commercial and human rights lawyer left her office in Sydney's Surry Hills just before noon and headed into the CBD to join 80,000 school children and other protesters to strike against climate inaction.

Then, after marching against coal and gas projects and in support of renewable energy, she returned to work and jumped on a call with the head of the world's biggest mining company, BHP's Andrew Mackenzie.

Brynn O'Brien, (second from right), executive director of the ACCR Credit:Wolter Peeters, The Age

Mackenzie wanted to talk to O'Brien about her group's latest demand: that the miner cut ties with a list of influential lobby groups accused of advocating policies incompatible with the goals of the Paris climate agreement, which aims to limit global warming to 1.5 degrees.

"He [Mackenzie] outlined BHP's green credentials, made some statements about their relationships with lobbyists and then was questioned by the group about the holes in their approach," recalls O'Brien, the executive director of the Australasian Centre for Corporate Responsibility, a shareholder activism group. "The group was not persuaded."

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As fresh waves of protests swept across the world again this week, O'Brien and a new breed of formidable activists like her are leading another front of the climate push: agitating for change at some the nation's biggest and best known listed companies.

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"The climate crisis is such a huge challenge that we have to use every tool available to us," says O'Brien. "One of those is civil disobedience and non-violent disruptive action ... another is using corporations law and the investment system."

Over the next two months, shareholder activist groups like ACCR and Market Forces are set to feature prominently in an annual general meeting season in which climate issues are poised to overshadow the usual debates over executive pay.

And while it’s far from certain the activists' demands will be met, it is clear corporate boards and executives can no longer afford to ignore them. For evidence, look no further than the fact O'Brien's call with BHP's Mackenzie took place.

The seriousness with which ACCR and similar groups are being taken by boards is in part due to a growing a focus from big investors - including but not limited to union-aligned industry super funds - on environmental, social and governance (ESG) issues.

Will van de Pol (left) and Julien Vincent of Market Forces.Credit:Jason South

The way shareholder activist groups such as ACCR and Market Forces work is this: by attracting enough investor support, they can lodge strategic resolutions that must be publicly voted on at the meetings. Through this tactic, they can force the hands of some of the country's heaviest polluters and their financial backers to consider – and in some cases, adopt – ambitious climate action reforms.

"The one at BHP is a classic example – it is a call for action," says Gray, who is in charge of ESG at the $165 billion industry fund behemoth.

BHP is the biggest company in the crosshairs of climate activists this AGM season. At the miner's upcoming AGMs in London in October and Sydney in November, the uncomfortable resolution lodged by the ACCR, and co-filed by big-money global investors that hold $140 billion in assets, will be voted upon.

BHP's approach of reviewing' their memberships and staying 'inside the tent' over the past few years has catastrophically failed.

ACCR executive director Brynn O'Brien

It calls for the company to suspend its membership of groups including the Minerals Council of Australia and the Business Council of Australia due to their advocacy for issues such as subsidies for coal-fired power stations in Australia and the development of a new thermal coal basin.

The resolution had serious backers from the outset, including Australian tech billionaire Mike Cannon-Brookes' family office Grok Ventures, Denmark's MP Pension fund and the Church of England Pensions board.

Although a fossil fuel producer, BHP has earned a name as a leading voice in corporate Australia for climate action. (Mackenzie has been heavily criticised by sections of the media and by some conservative politicians for speaking up on climate issues).

The miner has been publicly pushing federal policymakers to set a price on carbon and recently unveiled ambitious goals to combat not only its own emissions, but emissions from customers that use its products such as coal and iron ore.

But as one of the most influential companies in the nation, the way it chooses to spend shareholders' money on policy advocacy is closely scrutinised

"BHP's approach of reviewing' their memberships and staying 'inside the tent' over the past few years has catastrophically failed," O'Brien argues. "There is demonstrable evidence of their industry associations continuing to attack emissions policy."

Despite the company's pro-climate messaging, the board members of BHP have urged shareholders to vote the ACCR resolution down.

Public signalling

While shareholder resolutions have become more common, their headline support levels are generally low, sometimes as little as 1 per cent. In Australia, resolutions deemed to relate to management first require separate resolutions to change the company’s constitutions. It's a hurdle that is difficult to overcome.

What sizeable protest votes can achieve, however, is putting on the record a 'public signalling' to the board of shareholder views which often precipitates meaningful conversations and even voluntary change.

We basically are just part of a movement – we are trying to do our bit knowing we need all sorts of action at once.

Market Forces director Julien Vincent

A similar resolution to BHP's was put to Origin last year and gained a staggering 46 per cent of investor support – the largest-ever vote for a resolution without the support of the board. The energy company avoided a similar resolution this year after announcing a review that had found inconsistencies on some climate policy issues.

"Public signalling cannot be overstated," O'Brien says.

As of this weekend, according to the ACCR, investment houses which have now made pre-declarations of support for the BHP resolution now represent $12 trillion in funds under management. New backers include AXA, Aberdeen Standard, BNP Paribas, Aviva and super fund HESTA.

"What has become a difference recently is the number of investors who are co-filing these things, rather than just the activist groups," said a shareholder adviser, who declined to be named. "In some cases now they have institutional shareholders supporting them, a few with very big credentials."

The ACCR alone has eight resolutions on the immediate horizon this year, most of which are targeting climate risk mitigation. Others are focussed on social issues such as labour exploitation in retailer Coles' supply chain or pushing Qantas to review its policy of involuntary transfers of people in the immigration detention system including deportation and movements to detention facilities in Manus Island or Nauru.

Behind the scenes

"Most of our engagement is behind the scenes and won't go to shareholder resolutions," explains O'Brien. "Private engagement is effective, but the possibility that it will come out into the public is a very strong lever that we have in order to achieve change within companies."

In the coming two months, at least 10 shareholder resolutions will be voted on after being lodged by the ACCR and Market Forces. The resolutions from the Melbourne-based Market Forces, which is linked to radical environmental pressure group Friends of the Earth, are exclusively geared to climate risk mitigation issues.

"These resolutions, we prepare them and write them up in the hope we don't have to lodge them," says Market Forces director Julien Vincent, adding that private dialogue with company leaders is where they can often achieve their biggest concessions. "But they have been extremely effective."

Both Market Forces and ACCR's attention turns to Origin Energy next week, with a string of climate-related resolutions. They include calls for the company to phase out coal power generators consistent with the Paris agreement goals; seeking support for resolutions urging emissions reduction targets for its direct and indirect emissions and those of the customers of its products; an assessment of new pollution controls at its Eraring coal-fired power station; and a review of whether the company has properly obtained informed consent from the Aboriginal communities near its intended fracking site in the Northern Territory's Beetaloo basin.

This week, some of Australia's biggest banks were also put on notice. Market Forces filed resolutions with National Australia Bank, ANZ and Westpac calling to align their lending and exposure to fossil fuel projects with the goals of the Paris accord.

While banks have significantly decreased their exposure to new fossil fuel projects since they pledged to support the Paris climate agreement in 2016, Market Forces claims a review of their 2018-19 loan books found some had started to increase exposure again.

There's an increasing sense of urgency about the problem and an increasing awareness from investors.

Will van de Pol from Market Forces

Market Forces began in 2013 when it dawned on Friends of the Earth and the broader environmental movement that "we were really missing a trick" by not having an organisation dedicated to pressuring companies via their financial institutions and investors to change their behaviours, says Vincent.

Vincent, once a Greenpeace organiser, is no stranger to on-the-ground campaigning. He and his colleagues attended last month's climate strike in Melbourne's Treasury Gardens, which drew a crowd of more than 100,000.

"We basically are just part of a movement – we are trying to do our bit knowing we need all sorts of action at once, " he says. "We need political action, people challenging governments, communities affected by new fossil fuels projects pursuing legal channels."

Will van de Pol, a legal analyst with the group, who engages with institutional investors on key campaigns and potential resolutions, says the level of support among the investment community for climate-related issues has been noticeably on the rise.

"There's an increasing sense of urgency about the problem and an increasing awareness from investors," he says.

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Global proxy advisory ISS, which provides recommendations to large institutional investors on how to vote on AGM resolutions, says the groundswell of awareness of climate change in the community is causing more investors to "make their own calls" on climate-related votes.

"Sometimes they agree with us, sometimes they disagree," says Vas Kolesnikoff, ISS head of Australia and New Zealand research

"Things are happening ... and it's definitely putting more pressure on companies to act and to move."

AustralianSuper's Gray says over the long run, the risks from climate change for investors could be significant. For example, sudden regulatory changes could slash asset valuations, causing some to become economically "stranded".

Despite the rising tide of activist resolutions, Gray says they will not automatically attract greater levels of support from institutional investors. Big institutions will look at resolutions through a long-term lens to ensure they are "high quality" and "investment-grade" resolutions, he says.

And direct engagement with companies behind the scenes can also be effective. "It's horses for courses – sometimes [resolutions] are the most effective approach and other times it's private engagement," he says.

"But I do credit shareholder resolutions often on issues such as climate change as having added a degree of urgency."